The rampant overfishing of sharks, often solely for their fins, is causing a damaging chain reaction that could significantly degrade coral reef systems, a decade-long Australian-led study has found.

Scientists from Australia and Canada, led by the Australian Institute of Marine Science, discovered that the removal of sharks from two remote reef systems led to a sharp decline in the number of fish that help keep coral healthy.

The remote study area, of Scott Reef and Rowley Shoals, off the north-west coast of Australia, is regularly accessed by Indonesian fishers who catch large numbers of sharks using traditional methods.

While legal, the targeting of grey reef and hammerhead sharks triggers what researchers call a "cascade" effect in which populations of mid-level predators – such as snapper – boom. In turn, these fish pick off the small herbivorous fish that are vital for the health of the reef.

"Going by our surveys, around four sharks a day were being taken from these reefs," Mark Meekan, principal research scientist at AIMS, told Guardian Australia. "This doesn't sound like a lot, but it has been going on for a long time. The fishermen come in their sailing prows, which can dry an awful lot of shark fin on the decks.

"The result of this is that the whole food chain is being thrown out of whack. Snappers are far more abundant when the sharks are gone and they take out the algae-eating fish."

Coral reefs are subject to various stresses, such as cyclones or bleaching. For the coral to grow back, algae that forms after such incidents has to be cleared away, which is mainly done by fish. The study found a sharp decline in herbivorous fish over the 10-year course of the research.

"This means that the reef has far less resilience, which is a real worry," Meekan said. "Sharks are like a good insurance policy for reefs. We know that with climate change there will be more cyclones and bleaching events, so having sharks in there is one of the best ways we can ensure the health of reefs."

The study's findings apply to reef systems around the world, including the Great Barrier Reef. About 100m sharks are killed worldwide a year, often after having their fins hacked off for dishes such as shark fin soup.

There has been a marked decline in reef sharks within the Great Barrier Reef area, even though about a third of the ecosystem is in a "green zone" that protects the marine predators.

"Large numbers of reef sharks are being removed by fishing, I'm sad to say," Meekan said. "They only have a few pups, possibly every second or third year, so it takes a long time for them to bounce back. The upside is that a well protected marine reserve can help protect sharks, and the reef around them."